When a non-practicing entity called Oasis Research LLC sued EMC Corporation and 17 other companies for patent infringement in 2010, EMC could have quickly settled and moved on, like many of its co-defendants did. Instead, EMC filed an unusual interlocutory appeal and won a ruling that limits the ability of patentholders to name a slew of defendants in the same infringement complainta tactic designed to induce settlements. Perhaps emboldened by its prior win, EMC is now seeking a ruling in the Oasis case that could ease the way for more cases to be transferred out of the plaintiff-friendly Eastern District of Texas.
EMC’s lawyers at Orrick Herrington & Sutcliffe recently urged the U.S. Court of Appeals for the Federal Circuit to transfer Oasis’s claims to U.S. district court in Salt Lake City, where EMC subsidiary Decoh Corporation is based. The request came in a writ of mandamus filed on October 16. A week later, a group of 15 tech companies filed an amicus brief supporting EMC’s petition.
To understand EMC’s argument, you first have to first understand the procedural history of the case. Oasis sued EMC and 17 other web storage companies in U.S. district court in Marshall, Texas, in 2010. alleging infringement of patents relating to data storage. In order to establish ties to Marshall, Oasis set up an empty office in the small town. (Don’t take our word for itNational Public Radio’s This American Life visited the offices and found little more than a nameplate on the door.) Several of the defendants, including EMC, immediately moved to sever the claims against them into separate cases. They argued that Oasis cast such a wide net because it figured that the defendants would settle rather than try to coordinate defenses and schedules. (Indeed, most of the defendants have since settled with Oasis.)
In May 2011, Mazzant denied the severance requests, ruling that the defendants can be properly joined in the same case because they all sell the same general kind of productonline storage. EMC appealed to the Federal Circuit through a writ of mandamus filed in September 2011. EMC pointed out that the America Invents Act, which was about to go into effect, includes a provision stating that defendants can only be joined in a single patent case if they are making the exact same product or service. While the new joinder rule didn’t apply retroactively to the Oasis case, it certainly lent credence to EMC’s argument that Mazzant should have severed the cases. Microsoft Corporation and five other tech giants filed an amicus brief supporting EMC’s bid, as The Wall Street Journal reported here.
As EMC hoped, in May 2012 the Federal Circuit vacated Mazzant’s ruling on severance and instructed him to use a more defendant-friendly approach to joinder. As we reported here, the In Re EMC ruling was a blow to NPEs that filed an unprecedented number of multi-defendant cases right before the AIA went into law.
By the time Mazzant reheard the joinder issue on remand, only seven defendants remained in the Oasis case. The judge agreed to sever them, but, to EMC’s displeasure, he used his discretion to consolidate the freshly severed cases for pre-trial purposes, writing that it would be inefficient to hear them all separately. And he denied EMC’s related motion to transfer to Utah. It would be a waste of judicial resources to transfer the claims against EMC now, Mazzant ruled, since they’ve already been pending in Eastern Texas for two years. As we reported here, rulings similar to Mazzant’s are preventing the Federal Circuit’s In Re EMC ruling from having much practical impact on pre-AIA cases.
In its October 16 writ, EMC doesn’t object to Mazzant’s decision to reconsolidate the severed cases, but it does take issue with his ruling on the related motion to transfer. According to EMC, Mazzant should have severed and transferred Oasis’s claims against the company a long time ago, and he’s now unfairly penalizing EMC for his own delay. “[T]he fact that the case has been litigated in the Eastern District of Texas for two years is directly attributable to … the district court’s prior errors,” EMC argues. “The district court’s reliance on the consequences of its own errors to deny meritorious transfer motions was a misapplication of ‘judicial economy.’”
If the Federal Circuit sees things EMC’s way, defendants in post-AIA cases would stand to benefit. Since the joinder provisions went into effect, patent plaintiffs will now bring several nearly identical infringement complaints against multiple defendants on the same day. In a recent decision, the chief judge of the EDTX, Leonard Davis, issued a blueprint for handling such cases. He ruled that in the name of efficiency, the court will consolidate related complaints for pre-trial purposes, and then put off ruling on motions to transfer until after the claim construction phase of the case. Because that’s one of the later stages of a patent case, defendants will be right back to coordinating defense and schedules at the beginning of a case. A ruling from the Federal Circuit in EMC’s favor could upset that new framework.
On October 23, Google Inc., Facebook Inc., and 13 other tech companies filed a joint amicus brief in support of EMC’s arguments. “This court should not allow its decision in In Re EMCas well as the judgment of Congress embodied in the AIAto be rendered dead letters,” Matthew McGill of Gibson Dunn & Crutcher wrote on behalf of the amici. “Granting mandamus relief will make it clear that when a defendant files a timely motion to transfer its case to a more convenient forum, the district court must decide that motion … without placing undue weight on the plaintiff’s decision to file suits against unconnected defendants in the same district.”
Oasis is represented by John Desmarais of Desmarais LLP, a former partner at Kirkland & Ellis who now owns Round Rock Research, a patent licensing company. Desmarais wasn’t available for comment on Monday.
EMC is represented by an Orrick team including Mark Davies, I. Neel Chatterjee, and Chris Ottenweller. Chatterjee didn’t immediately return a call seeking comment.
